Investors interested in stocks from the Communication - Infrastructure sector have probably already heard of CommScope (COMM) and Calix (CALX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
CommScope and Calix are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that COMM is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
COMM currently has a forward P/E ratio of 7.17, while CALX has a forward P/E of 53.84. We also note that COMM has a PEG ratio of 0.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CALX currently has a PEG ratio of 8.97.
Another notable valuation metric for COMM is its P/B ratio of 2.04. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CALX has a P/B of 2.47.
These metrics, and several others, help COMM earn a Value grade of B, while CALX has been given a Value grade of D.
COMM has seen stronger estimate revision activity and sports more attractive valuation metrics than CALX, so it seems like value investors will conclude that COMM is the superior option right now.
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CommScope Holding Company, Inc. (COMM) : Free Stock Analysis Report
Calix, Inc (CALX) : Free Stock Analysis Report
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